Commercial insurance policies can be very complex and often times have hundreds of pages. Sometimes there are things in the back of the policy that maybe aren’t so favorable. They might even have a positive connotation, but if read in detail are actually the opposite.
Today, let’s focus on one endorsement that is often overlooked that could have some serious ramifications: Protective Safeguards. Examples of protective safeguards that businesses have are sprinkler systems, fire and security alarm systems, security and service contracts, and cooking surface extinguishing systems.
Insurance company underwriters are very pleased to see that the businesses they are insuring have protective safeguards in place. They might even give you a discount for having them. However, what happens if you have these systems in place but you knew they weren’t working properly? That’s where the Protective Safeguards endorsement comes in. The Protective Safeguards Endorsement BP0430 07/13 ISO form states:
“We will not pay for loss or damages caused by or resulting from fire if, prior to the fire, you: 1. Knew of any suspension or impairment in any protective safeguard listed in the Schedule above and failed to notify us of that fact; or 2. Failed to maintain any protective safeguard listed in the Schedule above, and over which you had control, in complete working order.”
As you can see, this is some scary policy language. Now that you know what this endorsement does, how can you protect your business from having a claim declined?
Here are some tips:
- Check your policy for this endorsement. Some carriers may not even use it. Check the schedule on the endorsement to see which protective safeguard applies.
- If you have knowledge of a malfunction in any protective safeguard listed in the schedule notify your agent in writing promptly. Discuss this with your managers and make sure they notify you if something is not working.
- Have your protective safeguards serviced at the recommended intervals.
- Ask your agent to request that the carrier remove it from your policy.
Hopefully this helps to shed some light on the back end of your commercial insurance policy. If you’d like help reviewing your insurance policy for this endorsement or others like it, contact your trusted advisor at Hausmann-Johnson Insurance.